Is The Multi-Month Consolidation In Gold, Silver and The Miners Ending?

We are encountering storms in the market rarely seen. The volatility has affected
many mining equities with many high quality assets selling at record low prices.
Portfolios have rarely seen such see saw price activity as they have this year.
Sacrosanct rules are simply not working. The markets are thwarting and aborting
attempts to use time tested approaches.

The great Scottish Poet Robert Burns described the current market by writing, "the
best made plans of mice and men go oft astray." He also observed "alas in this
world there is more offal than poetry." But poetry hardly pays and compost
does.

We try to tell it like it is. We do not use the technical jargon of the engineers
and the economists that serve more to confuse and obfuscate the investor. In
fact it was Einstein who stated, "the nth degree of complexity is simplicity." We
attempt to cut away the fat from the meat. So how do we direct you through
these present swamps of despond and misdirection?

Remember the October
4th low and our reversal signal at 1074 on the S&P 500 made a "V" turnaround
and vaulted to a new 52 week high. It remains to be seen whether the rally
we have called will mark a rotation into the resource markets and precious
metals. If blood is not flowing for mining investors, they are certainly
coloring our screens red, while the moribund banks and housing stocks soar
driving the S&P higher. Fundamentally something is just not right. The
U.S. debt crisis is far from over and this basing period in precious metals
and commodities may turn out to be an exceptional buying opportunity as investors
rotate from overbought U.S. equities, treasuries and dollars into high quality
wealth in the earth assets.

In such a scenario, the U.S. dollar and long term bonds by comparison looks
attractive when stacked up against the crumbling currencies of the Eurozone.
The chart shows an anomaly occurring. In 2008 and 2010 during the credit crisis
and sovereign debt crisis, the dollar and treasuries rallied together. In 2011
and 2012, treasuries hit record highs, yet the U.S. dollar is not at comparable
levels. This may indicate that the greenback is losing the safe haven appeal
of yesteryear.

We note with interest that in 2011 the Chinese Metal Exchange in Shanghai
made ominous noises about raising the margin rate on silver. It would seem
that the bankers consistently choose to handicap silver and gold while favoring
U.S. bank stocks, dollars and treasuries.

Eventually we believe this suppression of precious metals can only be kept
down for a discrete period of time before the pressure mounts in the favor
of gold and silver, as if and when Bernanke and his European colleagues return
to the printing presses as they have done before and are now indicating to
do again.

The miners (GDX) are once again declining and are testing two year lows creating
a firesale discount on blue chip producers. The miners are trading at a significant
discount to gold at less than $1200 an ounce. Some top notch mining assets
in the United States are trading at less than $17 an ounce of resource. This
indicates investors are forecasting lower gold prices. We disagree and believe
the crowd is wrong here. We are actually near a bottom in precious metals and
miners. A turn around should be coming sooner rather than later.

For many months GST has said that there may be a master Keynesian strategy
that is being followed to revive the moribund banks of Europe and the United
States. This is an ideal time to make this move, the U.S. dollar appears to
be stronger for the time being, U.S. bonds are selling at relatively record
low yields, unemployment remains high, commodities/precious metals have significantly
corrected and the risk of inflation has abated. In fact, they may be already
printing LTRO 2 to staunch the Eurozone collapse. Just as QE2 was used by the
Federal Reserve Board to staunch the bleeding of the Eurozone in 2010, it is
entirely possible that they will institute the latest version of can kicking
down the road. Let us hope they "follow the yellow brick road" and we may witness
a rotation from overbought equities into tangible assets, commodities and mining
equities.

I started reading charts at eleven years old. One day my father, a market
trader and technician found his library of books on technical analysis mysteriously
disappearing. He later found the textbooks under my bed. For many years day
and night I studied technical analysis and charting, working and learning from
my father who has over 50 years of trading experience. Technical analysis is
my passion and love.

In 2001, I started noticing the junior mining stocks and gold as having a
tremendous upside. For the past 9 years I have researched many juniors and
have identified the major winners using technical analysis and finding top
management.

I earned a Bachelors Degree in Mathematics and a Masters Degree. I learned
most of my technical analysis from the school of hard knocks, managing real
money for myself and for my family.

Constantly perfecting my craft, I have traded for two decades of success in
many different markets. I have been asked to post ideas to some of my students
who have taken my course in charting and technical analysis. I have made an
excellent living trading stocks for myself.

We are offering ideas for your consideration and education. We are not offering
financial advice. None of our content is provided to invite or encourage any
person to make any kind of investment decision. We are not financial advisors.
We advise you to consult with a professional financial and investment advisor
before relying on any content.

We are sharing our ideas for educational and informational purposes only.
You must do your own due diligence and are responsible for your own investments.

Companies that are followed in our premium service may become sponsors on
Gold Stock Trades and/or our free or affiliate websites to distribute press
releases or corporate updates for a monthly fee on our free website. From time
to time, Gold Stock Trades and its directors, officers, employees or members
of their families, as well as persons interviewed for articles on the site,
may have a long or short position in securities mentioned and may make purchases
and/or sales of those securities in the open market or otherwise. Please see
our list of current sponsors and
featured companies for any potential conflicts of interest.

Some information in our content can be construed as forward-looking statements.
Forward looking statements are uncertain and actual results may differ from
our expectations. We seek safe harbor.

By reading this disclaimer you will not hold responsible any person associated
with http://goldstocktrades.com responsible
for any losses that may occur from trading based on this information. If you
do not agree with the terms of our disclaimer, do not access our website or
content, and unsubscribe if you are already a member.

Sign up for my free newsletter where I will post my "up to the minute" ideas
and analysis of the markets. Comment and ask questions as we are all learning
and growing. Empower yourself and learn how to anticipate opportunities.